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Thursday, January 31, 2008

More from the debate: I was shocked to hear Clinton say that “there are people who have been pushed out of jobs in factories, in meat-processing plants, in all kinds of settings” by immigrants, in response to a question about the effect of immigrants on African-Americans. I've never heard this kind of thing from her before. It must be a tactical move to appeal to anti-immigrant feeling in California. Anti-immigrant sentiments always take an upswing during economic downturns as people look for someone to blame. It's disappointing to hear her take this tack. Obama rightly said that blaming immigrants for job losses is just scapegoating.

Watching tonight's debate, I can't see that there's any difference. Clinton seems to concede that there won't be any enforcement for her health care "mandate." As Obama has noted elsewhere, unless there's enforcement, the "mandate" is just a gimmick and political talking point. People who don't want to sign up for a health care program--subsidized or not--won't do so under either Clinton's or Obama's plan. Timothy Noah in Slate has a good discussion of why Obama's on the right side of the mandate issue.

UPDATE: The Washington Post's Fact Checker claims that the estimate that 15 million would not be covered under Obama's health care plan comes from an extrapolation from the Massachusetts plan. As far as I know, that's incorrect. According to the Washington Post itself, and the two other fact check sites, the "dubious" figure comes from a rough guesstimate in a New Republic article. From the Obama website:

"Clinton Uses A Dubious Statistic When She Claims Obama's Plan Would Leave Out 15 Million Of The Uninsured." FactCheck.org reported, "Clinton uses a dubious statistic when she claims Obama's plan would leave out 15 million of the uninsured…Clinton based her claim on a column by The New Republic's Jonathan Cohn, who loosely estimated Obama's plan would leave 15 million uninsured…Cohn makes it clear here that he is offering an estimate based on the best information available, not a hard and fast calculation. And the best available information doesn't always agree." [FactCheck.org, 11/16/07]

Clinton's Claim "Based On Too Many Hypotheticals To Rate More Than A Half True." "It's a tough call, but because of the disagreements here, we find her claim to be based on too many hypotheticals to rate more than a Half True." [Politifact, 11/15/07]

Clinton Cited "Hardly An Authoritative Source" For The 15 Million Claim. "So where did Clinton get her figure of 15 million uninsured under the Obama plan? Her website cites an article in the New Republic, hardly an authoritative source." [Washington Post, 11/15/07]

Clintonism, as New America Foundation fellow Mark Schmitt puts it, is a way of accommodating liberalism to a hostile political environment. This is the formative lesson that the Clintons have imbibed. It is also the central view of Hillary's main strategist, Mark Penn, a pollster who came to her via Morris, who has long advocated for moderate policies aimed at affluent, center-right swing voters. It is not an accommodating kind of moderation. It's a moderation that assumes fierce partisan opposition and aims to narrow its target profile and eke out small victories.

No wonder the Clintons disdain Obama's soaring optimism--it flies in the face of all their political experience. Obama's liberal critics depict him marching unarmed into a partisan battlefield. As Paul Krugman has warned in one of his many anti-Obama columns, "[N]othing Mr. Obama has said suggests that he appreciates the bitterness of the battles he will have to fight if he does become president, and tries to get anything done."

Krugman's critique reflects an understandable confusion about Obama's call for unity. In recent years, "bipartisanship" and "national unity" have usually meant meeting the GOP halfway, regardless of how far right it veers, with agreement an end in itself.

But this is not Obama's meaning of national unity. Substantively, he has not embraced many conservative ideas. And he has explicitly repudiated the notion that unity is an end in and of itself--the purpose is to bring in non-Democrats to enact liberal goals. "If you know who you are, if you know what you believe in, if you know what you are fighting for," Obama says, "then you can afford to listen to folks who don't agree with you, you can afford to reach across the aisle every once in a while."....Obama recognizes that polarization is what's preventing Democrats from turning their public opinion advantage into a working majority. His famous 2004 Democratic convention riff about red-staters who "have gay friends" and blue-staters who "worship an awesome God" was not merely a call for unity. It was an attempt to subvert the conservative strategy of cultural divide-and-conquer. Clintonism is a political strategy that assumes a skeptical public; Obamaism is a way of actualizing a latent ideological majority.

Wednesday, January 30, 2008

Obama gave a speech today in Denver, emphasizing the differences between himself and Clinton:

“It’s time for new leadership that understands that the way to win a debate with John McCain is not by nominating someone who agreed with him on voting for the war in Iraq; who agreed with him in voting to give George Bush the benefit of the doubt on Iran; who agrees with him in embracing the Bush-Cheney policy of not talking to leaders we don’t like, and who actually differed with him by arguing for exceptions for torture before changing positions when the politics of the moment changed.”

It's striking how weak and defensive the response on Clinton's website is. Although one could quibble with the exact characterizations Obama uses--for example, we can't actually know why Clinton initially argued for allowing torture in some cases and then changed her mind--each of Obama's points refers directly to a position or vote that Clinton took. The Clinton response consists mainly of bringing up some irrelevant other fact, e.g. that someone else who supports Obama had the same position as Clinton. So what? Is Clinton trying to suggest that Obama can't hold a position different from those of any of his supporters? Obviously, this is an impossible and ridiculous standard. Indeed, the diversity of support for his campaign, among people who don't line up behind him on every single issue, is one of the advertised strengths of this campaign.

Question: The Bush Administration is proposing to spend $1.4 billion on the Merida Initiative, providing military aid to Mexico and Central American Countries. According to the State Department, the money would mainly be used to pay for relatively low-tech components, such as basic helicopters, canine units, communications gear, and inspection equipment. Do you support the initiative?

As far as I can tell, no one has asked Obama and Clinton about their stances on the Colombia free trade agreement, since Clinton announced her opposition last November.

Question: Sen. Clinton opposes pending free trade accords with South Korea, Panama, and Colombia. President Uribe of Colombia has said that her opposition to the Colombia free trade accord with his country reflects "an unforgivable lack of understanding" of Colombia. Is he right? (And for Obama: what is your position on the Colombia agreement?)

Suggested answer for Obama: See this briefing. In short, before I can support the agreement, the Colombian government should lay out exactly what it has done and what it will do to address violence against union members.

Sunday, January 27, 2008

The inaugural issue of PATHWAYS, a new magazine on poverty, inequality, and social policy, has articles by the three Democratic candidates on the their anti-poverty proposals, along with an evaluation by Rebecca Blank, who's probably the top economist specializing in welfare issues (she was on Clinton's Council of Economic Advisors for a time and is currently a professor at the University of Michigan). Here's the PDF of the whole issue. It also has some great other material, including an update on inequality from Emmanuel Saez.

Overall, Blank says that all three say good things. As with most issues, the policy differences between the three candidates are slim. Here's the heart of her review:

Clinton, Edwards, and Obama each propose multiple policies,many of which are worth considering, but it is hard to tell howthey would prioritize their current list of proposals. Presidentsface limited resources and hard choices once they actuallyenter the White House and have to decide where to place theirpolitical chips ....

Obama, Edwards, and Clinton all have multifaceted and seriousanti-poverty plans. Anyone concerned with poverty issues couldhappily vote for any of them. Edwards has made poverty a cen-terpiece issue for his campaign from the beginning; Clinton hasthe best early childhood proposals; Obama is the most thought-ful on jobs for disadvantaged youth and urban change and (formy money) the most creative in putting new policy ideas on thetable, such as low-cost Internet service in poor neighborhoods.But all of them understand that the measure of this country isnot just the size of its GDP or the wealth of its richest citizens.America must also be measured by how we assist those who areour poorest citizens, making sure that they have the opportunityto find a job, to support their families, to educate their children,and to catch onto the American dream.

I was struck that this speech, the first that I've seen him give recently that so explicitly evoked his theme of racial unity, had such strong echoes of MLK's I Have a Dream.

MLK:

So let freedom ring from the prodigious hilltops of New Hampshire. Let freedom ring from the mighty mountains of New York. Let freedom ring from the heightening Alleghenies of Pennsylvania!

Let freedom ring from the snowcapped Rockies of Colorado!Let freedom ring from the curvaceous slopes of California!But not only that; let freedom ring from Stone Mountain of Georgia!Let freedom ring from Lookout Mountain of Tennessee!Let freedom ring from every hill and molehill of Mississippi. From every mountainside, let freedom ring.

Obama:

And as we leave this state with a new wind at our backs, and take this journey across the country we love with the message we’ve carried from the plains of Iowa to the hills of New Hampshire; from the Nevada desert to the South Carolina coast; the same message we had when we were up and when we were down – that out of many, we are one …

MLK:

And when this happens, when we allow freedom to ring, when we let it ring from every village and every hamlet, from every state and every city, we will be able to speed up that day when all of God's children, black men and white men, Jews and Gentiles, Protestants and Catholics, will be able to join hands and sing in the words of the old Negro spiritual, "Free at last! free at last! thank God Almighty, we are free at last!"

Obama:

The choice in this election is not between regions or religions or genders. It’s not about rich versus poor; young versus old; and it is not about black versus white.

Wednesday, January 23, 2008

I've been wondering about this, particularly since he's publicly ruled out being the vice-presidential nominee. I realized signed up for a conservative e-mail list (to know the enemy), and I recently received a newsletter from Bob Novak. Novak shares the title "Prince of Darkness" with Richard Pearle, and unlike Pearle, he is evil but not stupid. He offers this this theory:

Why is former Sen. John Edwards (N.C.) staying in? He cannot be nominated, but extreme proportional representation by the Democrats means that he could collect hundreds of delegates and go into a deadlocked national convention capable of swinging the nomination either way. There is no doubt that he would swing to Obama. Obama and Edwards are extraordinarily chummy, and important elements of organized labor would like to see Edwards as attorney general in an Obama cabinet.

I'm not sure this is Edwards' game, but it's hard to imagine that the possibility hasn't at least occurred to him. On first reflection, I think he could be a superb attorney general.

I think Ruth Marcus is usually awful, but her review of fiscal stimulus policy proposals, comes to exactly the same conclusion as I did in an earlier post: all the Democratic candidates are offering decent proposals, but Obama's is slightly better, rating an A- on her scale.

Matthew Yglesias quotes one of his commenters making what I think is a fundamental point about Clinton's candidacy:

It's really strange... each time Hillary really goes for the jugular (fairly or unfairly), I am repulsed. And then 30 seconds later, I realize that that's the whole rationale for her candidacy! She (and Bill) will simply do whatever it takes to win.

By attacking Obama with distortions, she's trying to demonstrate that she knows how to play dirty, because this skill is supposed to be an asset in a general election. But she's counting on voters to value this ability as a positive while not counting it against her that she (and Bill) are playing dirty.

Thursday, January 17, 2008

This post begins our promised series reviewing Obama's economic policy program. On trade policy, both Clinton and Obama have taken pains to not paint themselves as protectionists, while at the same time echoing the critiques voiced by those opposed to trade agreements.

After looking closely at their statements and positions, my overall determination is that while their rhetoric is similar, Clinton has changed her stance quite sharply and is now more anti-trade than Obama. Specifically, she has announced her opposition to three pending trade agreements--Colombia, South Korea, and Panama--while Obama has not taken any position on these agreements. (More on these agreements below).

In terms of positions on earlier agreements that have come before the Senate, their records are identical. Both voted against the Dominican Republic-Central America Free Trade Agreement in June 2005, and both have said they would have voted for the Peru free trade accord in December 2007, although they were campaigning at the time and were not present for the vote.

Obama believes that trade with foreign nations should strengthen the American economy and create more American jobs. He will stand firm against agreements that undermine our economic security.

Fight for Fair Trade: Obama will fight for a trade policy that opens up foreign markets to support good American jobs. He will use trade agreements to spread good labor and environmental standards around the world and stand firm against agreements like the Central American Free Trade Agreement that fail to live up to those important benchmarks. Obama will also pressure the World Trade Organization to enforce trade agreements and stop countries from continuing unfair government subsidies to foreign exporters and nontariff barriers on U.S. exports.

Amend the North American Free Trade Agreement: Obama believes that NAFTA and its potential were oversold to the American people. Obama will work with the leaders of Canada and Mexico to fix NAFTA so that it works for American workers.

Improve Transition Assistance: To help all workers adapt to a rapidly changing economy, Obama would update the existing system of Trade Adjustment Assistance by extending it to service industries, creating flexible education accounts to help workers retrain, andproviding retraining assistance for workers in sectors of the economy vulnerable to dislocation before they lose their jobs.

Clinton's October 8, 2007 economic policy press release says that she will do the following:

Appoint a trade enforcement officer within the office of the United States Trade Representative (USTR) and double the size of USTR’s enforcement unit....

Overhaul the Trade Adjustment Assistance (TAA) program ....

On Trade Adjustment Assistance, their positions are very similar. This is part of the standard center-left policy program to compensate those who lose out under trade agreements. Most economists favor this kind of policy because it is what a standard economic analysis points you towards: free trade increases overall income but has winners and losers, so the right approach is to use some of the income boost from lowering trade barriers to compensate the losers.

Apart from TAA, looking at these "official" economic policy programs--which were probably drafted by the candidates' economic policy advisors--you would think Obama is the greater trade skeptic. Clinton's promise to appoint another official in the trade rep's office is near meaningless, while Obama wants to amend NAFTA and is promising to demand that labor and environmental pacts be included in trade agreements.

Clinton, however, has taken a much more anti-trade position since her economic policy was issued in October.

Consider, for example, the responses to the Iowa Fair Trade Campaign questionnaire, which was issued (and presumably filled out by the candidates) in December. The Clinton and Obama positions are generally similar.

Both promise to renegotiate parts of NAFTA (Clinton: "As President I will review NAFTA and work with our trade partners to correct its shortcomings.") Both promise to include strong labor and environmental protections in trade agreements.

Clinton's position, however, has moved to a more anti-trade position than Obama, in two respects. First, she nows calls for what she refers to elsewhere as a "time out," i.e. a moratorium on ALL new trade agreements. Here's what she says in the Iowa questionnaire:

I will not enter into new trade agreements or seek trade promotion authority, until my administration has ... reviewed all of our existing agreements to determine whether they are benefiting our economy and our workers.

Along these lines, while trying to get the support of labor groups in Iowa in November, she announced she would oppose three pending trade deals: Colombia, Panama, and South Korea. Her opposition to the Colombian trade deal has drawn the criticism of the Colombian president, and Colombian sources tell me her opposition to the pact is well-known in the country.

Thus, the main conclusion is that Clinton has positioned herself as the greater protectionist compared to Obama. I'll consider the merits of these positions in a future post.

The Washington Post's Fact Checker does a better-than-usual job of comparing Clinton and Obama's statements on the war, producing a hyperlinked timeline of their statements and votes.

Strangely, however, the WP leaves out various timeline items cited by both Clinton and Obama in their own Clinton vs. Obama pieces. The fact check also doesn't address what would seem to be a critical question: when did each candidate publicly call for a withdrawal of forces from Iraq?

As items on Obama's website show, Obama called for a withdrawal in an October 2005 interview and then in a November 2005 Senate speech.

From the WP material, it looks like Clinton didn't make any public statement for withdrawal until she voted in favor of a withdrawal bill on April 26, 2007.

The WP concludes, "The Obama camp has overstated the difference between Obama and Clinton on Iraq from 2004 onward." The facts appear to be just the opposite. Obama was clearly out in front in calling for withdrawal in 2005 and 2006, when Hillary was still supporting a continued occupation.

I agree that Obama's comments around the time of the 2004 Democratic Convention were murkier, but this can be understood in part as a desire not to undermine the pro-occupation position of John Kerry, his party's nominee.

UPDATE:

I didn't deal with the more important topic of positions on the war before it began. As the WP explains, Obama took a strong public stand against the war on Oct. 2, 2002, just a few days before Clinton voted to authorize military force.

Less noted is that just before the March 20, 2003 invasion, Clinton refused to provide a clear statement of her position on the war. A reader sent me the following, from a March 6, 2003 NY Times roundup of positions on the war:

The award for the most indefinite position has to go to Senator Hillary Rodham Clinton. When her press secretary, Philippe Reines, was asked her position, he sent a transcript of Mrs. Clinton's remarks last Friday on CNN and a news account of her comments on Monday during a visit to Watervliet, N.Y. (It seems that the senator, still a bit first ladylike, is reluctant to pick up the phone.)

She said on CNN that the president ''made the right decision to go back to the United Nations'' and suggested that the country ''take a deep breath, deal with Iraq if we have to, understand exactly what we've gotten ourselves into, because in the briefings I've received, there's a lot of unknowables.''

In Watervliet, the senator said, ''This is a very delicate balancing act.'' And, ''I fully support the policy of disarming Saddam Hussein.'' She also urged the administration ''to try to enlist more support.'' A skeptic might conclude that Mrs. Clinton wants to appeal to her antiwar constituents in New York now, and to a broader base later -- if she runs for president.

Tuesday, January 15, 2008

I'm generally against the use of a temporary fiscal stimulus, for reasons that Brad Delong mentions. Studies of this kind of thing estimate that the "lag" for fiscal policy--meaning the time between when the policy is first considered and when it actually has some effect--can be a year or more. Usually, by the time a fiscal stimulus package is enacted and has had time to take effect, the recession which inspired the initial calls for stimulus is already over.

For this reason, it's a better idea to rely on "automatic stabilizers," policy measures which automatically start pumping more money into the economy when the economy starts to go south. The standard example of this is unemployment compensation; when more people lose their jobs, the government automatically starts spending more on the program. The lag on such automatic stabilizers is short enough that they can have a good chance of serving as as a fiscal pump at the right time.

There are, however, some economists, including Larry Summers, who are arguing for a fiscal stimulus now, and all three major Democratic candidates have introduced stimulus packages. Let's say for the sake of argument that a stimulus package is a good idea and consider what sort of package would be best.

Here's a note from the Center on Budget and Policy Priorities and a recent Brookings primer on fiscal stimulus by Doug Elmendorf and Jason Furman.

Both the note and the primer explain that any fiscal stimulus should be timely, targeted, and temporary. The Brookings paper list the following Good Stimulus Ideas:

Extend unemployment benefits temporarily.

Issue flat, refundable tax credits temporarily.

Increase food stamps temporarily.

CBPP has one more: 4. State fiscal relief.

How about Bad Stimulus Ideas? Under "ineffective or worse" they list infrastructure investment, business tax incentives and reductions, and permanent personal tax reductions.

All three are proposing (1), extending unemployment benefits, and (4) state fiscal relief (linked to the housing crisis). Only Obama is proposing (2) temporary tax credits, though Clinton suggests they should be enacted if things get worse.

The glaring omission from all three candidates' plans is (3) increasing food stamps temporarily. This option has extremely attractive features: it can be done quickly and easily using existing systems, and it goes to people most likely to be in need, who have a high marginal propensity to consume, i.e. they'd almost all the money right away, which is what you want for a stimulus. I suspect they haven't proposed this because "food stamps" sounds like "welfare" to people, and welfare has been slimed by years of conservative propaganda.

All three propose various legal measures to stop people from being evicted during the housing crisis. There are a few other features to Clinton's and Edwards's proposals, but none of them are likely to have much effect as stimulus.

Clinton proposes a massive increase in spending $25 billion on emergency energy assistance for households facing high heating bills. Obama and Edwards have both supported spending more on this elsewhere. The entire budget of the LIHEAP program has never been much more than $3 billion, so she's proposing a massive expansion, presumably with the intent of making it permanent. This might be a good idea as general policy, but it's not effective stimulus.

Likewise, both Clinton and Edwards are proposing spending more on renewable energy, something that Obama also proposes elsewhere. Again, this may be a good idea, but it's not good as stimulus. It's basically in the category of one of the Bad Stimulus Ideas, "infrastructure investment," which will have too long a lag to prime the economy anytime soon.

The big contrast between the candidates' stimulus proposals are 1) Edwards and Clinton have thrown in some non-stimulating measures, and 2) Obama is proposing a tax rebate as a primary measure, which Clinton leaves as a backup measure, and Edwards doesn't mention at all.

Krugman asserts that Obama's proposal is "less progressive," apparently because it doesn't include renewable energy measures and because the tax rebates are not targeted to only the poor. But as noted, Obama proposes renewable energy measures as part of his long-term policy, where it belongs, rather than as a temporary measure. Although not well-targeted, the tax rebates have the huge advantage of being very easy to enact and distribute quickly as a temporary measure.

All together, I think I'm being objective when I conclude that Obama has the best stimulus program. It looks pretty much like the streamlined program the Brookings and CBPP experts would have written, minus food stamps, and has a halfway decent chance of actually working to its desired effect. I suspect, in fact, that it was written by Obama economic advisor Austan Goolsbee after talking with just those experts.

I've been working on two economic policy posts comparing the candidates (and responding to Krugman's column yesterday) but haven't yet wrapped them up.

Meanwhile, today is Martin Luther King, Jr.'s birthday and a good time to consider what I think is his best speech, "Why I Am Opposed to the War in Vietnam," delivered April 30, 1967. The full text is here and the audio is below. It's a great speech all the way through but really picks up steam in the last few minutes.

Obama clearly had MLK's speech in mind when he delivered his own brave address at an anti-war rally in Chicago on October 26, 2002, several months before the Iraq debacle bega.

Wednesday, January 9, 2008

The puzzle from New Hampshire is that the polls conducted in the last couple days were so far off the final result. People have offered lots of theories to explain this, but here's one that actually has experimental data to back it up, courtesy of Stanford professor Jon Krosnick, who has conducted substantial research on ballot design and voting behavior:

Without a doubt, a big source of the discrepancy between the pre-election surveys and the election outcome in New Hampshire is the order of candidates' names on the ballot and in the surveys. Our analysis of all recent primaries in New Hampshire showed that there was always a big primacy effect--big-name, big-vote-getting candidates got 3 percent or more votes more when listed first on the ballot than when listed last.

Until this year, New Hampshire rotated candidate name order from precinct to precinct, which allowed us to do that analysis. This year, the secretary of state changed the procedure so the names were alphabetical starting with a randomly selected letter, in all precincts.

The randomly selected letter this year was Z. As a result, Joe Biden was first on every ballot, Hillary Clinton was near the top of the list (and the first serious contender listed) and Barack Obama was close to last of the 21 candidates listed.

Thus, I'll bet that Clinton got at least 3 percent more votes than Obama simply because she was listed close to the top.

Most, if not all, of the pre-election telephone polls rotated name order from respondent to respondent, which meant name order did not distort their overall results. Failing to incorporate the name order effect that probably happened in the voting booth is therefore probably partly responsible for the polls' inaccuracy.

More importantly, if New Hampshire had rotated name order in the voting booth as it has always done in the past, the race would probably have been too close to call without a recount and might even have been an Obama victory.

See the ballot for yourself here. This sounds very convincing, although I would very much like to see the details of the New Hampshire analysis, which has apparently not been published. As a tenured Stanford professor, he gets the benefit of the doubt from me that his methodology is sound, and a quick look at some of his other work shows that he is a serious quantitative researcher.

Krosnick summarizes the literature, law, and his peer-reviewed research from other states on the "name order" phenomenon in this 2004 book chapter. The 3 percent advantage to the first big-name candidate appearing on the ballot appears consistent with his results from other states.

What's remarkable is that the earlier NH primaries, for which name order was randomized for each precinct, constitute the perfect true experiment to evaluate the effect of name order in NH primaries. There's no need to try to speculate what results from other places might mean for the state in question. This is the kind of thing that makes social scientists salivate.

The book chapter makes a number of interesting points. First, the importance of name order has been recognized for a long time. The chapter quotes Woodrow Wilson from 1910 complaining that when a voter is faced with a long, complicated ballot, "in nine out of ten cases, he will simply mark the first name under each office, and the candidates whose names come highest in the order will be elected." And a 1934 study noted the following:

Much more important than the order of offices on an election ballot is the order in which the names of the candidates appear in office group ballots. This is particularly true in direct primary and nonpartisan elections, and is of most importance in cases where several persons are to be elected to the same office. The position at the top of a list of candidates is of material help to the candidate thus favored....

Second, although psychologists haven't nailed down exactly why this happens, such "primacy effects" whereby the first option is favored have been found in many experiments:

For example, when students take multiple-choice knowledge tests, they are biased toward selecting answers offered early in a list so they tend to answer items correctly more often when the correct answer is listed first than when it is listed last .... When people are told that an experimenter will imagine a series of questions and they should guess which of a set of offered response choices is the correct answer, people tend to select the first ones listed.... When people are asked to taste a set of beverages or foods (e.g./ four brands of beer) and select their favorite, they are biased toward choosing the first one they consider.... Voters may well manifest the same sort of bias in elections.

The chapter suggests several cases in which primacy effects might be acute. The following appears most applicable to the NH case:

If a voter has paid close attention to a well-publicized race and learned both favorable and unfavorable information about all competing candidates, the voter may feel substantial ambivalence, finding it difficult to choose between the competitors. In this situation, people may settle for the first name they see because they cannot make a choice on substantive grounds, despite having plenty of information about the competitors.

It appears that Obama may have been unfortunate victim of a screw-up by a NH election administrator. Previous to this year, New Hampshire was one of the few states to get it right: because the order was rotated precinct-to-precinct, no candidate enjoyed a primacy effect in the overall statewide count. The switch to a single statewide ballot, presumably done to reduce ballot printing costs by a few dollars, may have ended up costing Obama victory.

One might note, however, that in terms of the delegate outcome--which is what the primary is supposed to be for--a few extra percentage points for Obama wouldn't have made a difference. Clinton and Obama each received NH six delegates, and it would have been the same result had Obama nudged past Clinton.

This all just confirms what we learned in 2000 and again in 2004: having elections administered at the state and local level is a total disaster. If elections were run by a national body, we wouldn't end up having the results determined by screw-ups like this one in NH.

Saturday, January 5, 2008

The Washington Post "Fact Checkers" did a typically poor job doing real-time fact-checking of the debates. Here are a few points where their work falls short, with a focus on issues raised by the WP related to economics and/or Obama:

1) Bush Tax CutsWP:

Hillary Clinton said that George Bush's tax cuts benefited the wealthiest Americans. This is correct, since Bush cut marginal tax rates. However, such a charge lacks context. The wealthiest Americans pay a lion's share of non-Social Security taxes. The 400 wealthiest taxpayers pay about as much in federal income taxes as more than 40 million individuals and families at the bottom of the income scale, according to Internal Revenue Service data. The top 1 percent of taxpayers pay more than 30 percent of the taxes, which is why 30 percent of Bush's tax cuts went to the top one percent.

This is entirely wrong and sounds like something from a White House talking point. The fact that the Bush tax cuts chiefly benefited the wealthiest Americans is definitely not a result of the inherent distribution of taxes. The Bush tax cuts went mostly to the wealthy because of the particular structure of the tax cuts. A different set of tax cuts, e.g. the cuts proposed by Democrats in 2001, or the tax credit proposed by Obama, would be directed far more towards the non-rich. (It's also not true that the Bush tax cuts were only about changes in marginal rates, as this post implies.)

2) Clinton StrategyPart of the "fact check" just lists a bunch of points from a press release issued during the debate by a campaign spokesperson, with no analysis whatsoever. How does this in anyway constitute a "fact check?"

3) Health Care SpendingObama said "Our medical care costs twice as much per capita as any other advanced nation." Indeed, this is not exactly correct, at least not according to the OECD data. My objection here is to the fact that the WP does not cite the most recent data. They cite a January 2007 Kaiser Family Foundation study, which relies on 2003 OECD data. But the 2005 OECD data is available many places, including in Table 5 here. Note that U.S. costs are far more than twice the OECD average and are roughly twice almost all OECD countries, but it's true that Luxembourg, Norway, and Switzerland (all countries not comparable to the U.S. due to their very small populations) have costs that are substantially more than half U.S. costs. Next time Obama should say "Our medical care costs nearly twice as much per capita as any other large advanced nation."

(Note that it is possible that Obama's statement is correct, according to other data I'm not familiar with.)4) Non-ProliferationWP:

Sen. Barack Obama has just suggested that the nuclear non-proliferation treaty "fell apart" under the Bush administration. There have certainly been a lot of reverses over the last seven years, particularly on North Korea, but things weren't great under Clinton. It was under Clinton, after all, that India and Pakistan both tested nuclear weapons, which put a huge hole in the nuclear non-proliferation treaty.

This characterization is substantially wrong. According to Wikipedia, under Clinton in 1995, the NNPT was extended indefinitely by its signatories, which was a major accomplishment. I'm not sure what "put a huge hole" in the treaty is supposed to mean. Neither Indian nor Pakistan have ever been signatories to the NNPT, and India has been a nuclear power since 1974. I think that Obama is probably referring chiefly to the fact that progress on nuclear disarmament--which is one of the NNPT's three pillars--has been completely abandoned under Bush.

Relative to other candidates, Obama's economic policy proposals are thinner on the details. In my view, this is exactly the right approach. Candidates, particularly Democrats, have a tendency to over-specify their economic programs. This is partially a product of pressure from the media for candidates to demonstrate that they are "serious" thinkers. If a candidate is elected, the fine details of the policy he or she proposes will depend on the particular circumstances and negotiations at that point in time, so there's really no point in providing a microscopic level of detail. The major points of campaign policy are all that matters.

Over the next few weeks, we'll go through and critically examine each piece of the economic policy, and ultimately produce a complete annotated version of the economic program. Check back for regular installments in this series.

Friday, January 4, 2008

I think the answer is "no" for the Democratic nomination. Unless the Clintons come up with some serious dirt on Obama--and I expect they're planning to unleash whatever they have tomorrow or Sunday--it's very hard to imagine a scenario at this point that doesn't end up with Obama as the nominee. If you've got money at intrade.com, I would suggest you buy Obama.

Can any of the potential Republicans beat him? I think Huckabee, Giuliani, Thompson, and McCain have such serios problems that they would have no chance against Obama. Romney is the only one who would have a shot. Yes, he's a chameleon, but that's not a fatal flaw. If "electability" becomes the key criterion in the later stages of what looks to be a long Republican race, I expect Romney will be the nominee, notwithstanding his poor performance in Iowa.

Thursday, January 3, 2008

Barack Obama has won the Iowa caucuses. You’d have to have a heart of stone not to feel moved by this. An African-American man wins a closely fought campaign in a pivotal state. He beats two strong opponents, including the mighty Clinton machine. He does it in a system that favors rural voters. He does it by getting young voters to come out to the caucuses.

This is a huge moment. It’s one of those times when a movement that seemed ethereal and idealistic became a reality and took on political substance.

Iowa won’t settle the race, but the rest of the primary season is going to be colored by the glow of this result. Whatever their political affiliations, Americans are going to feel good about the Obama victory, which is a story of youth, possibility and unity through diversity — the primordial themes of the American experience.

And Americans are not going to want to see this stopped. When an African-American man is leading a juggernaut to the White House, do you want to be the one to stand up and say No?

Obama has achieved something remarkable. At first blush, his speeches are abstract, secular sermons of personal uplift — filled with disquisitions on the nature of hope and the contours of change.

He talks about erasing old categories like red and blue (and implicitly, black and white) and replacing them with new categories, of which the most important are new and old. He seems at first more preoccupied with changing thinking than changing legislation.

Yet over the course of his speeches and over the course of this campaign, he has persuaded many Iowans that there is substance here as well. He built a great organization and produced a tangible victory.

He’s made Hillary Clinton, with her wonkish, pragmatic approach to politics, seem uninspired. He’s made John Edwards, with his angry cries that “corporate greed is killing your children’s future,” seem old-fashioned. Edwards’s political career is probably over.

Obama is changing the tone of American liberalism, and maybe American politics, too.

Wednesday, January 2, 2008

This is not really a serious knock on Edwards, but there are two problems with his "30 Leading Economists Endorse John Edwards for President" list.

First, they're not all economists. The widely recognized entry card for the profession is a Ph.D. Manuel Castells, who's on the Edwards list, is a great thinker and one of the most important sociologists of all time (and has a doctorate in sociology), but he's clearly not an economist. Likewise, Harley Shaiken, also on the list, is a professor of education and geography with just a B.A. If Shaiken's an economist, I'm a ballet dancer.

Second, most of the economists are not "leading" by any stretch. The economists whose names I recognize are James Galbraith at UT's LBJ School, Deirdre McCloskey at UIC, and Edward Wolff at NYU.

I'm sure the others on the list are nice people, and many have done fine work in their particular fields, but it's a stretch to call them "leading economists" if a typical member of the profession doesn't know who they are.

Who's Edwards trying to fool here? It looks like Galbraith put this list together, and he's a savvy political adviser. I'm sure he saw value in convincing some political reporters that although he's running a populist campaign, Edwards is still mainstream enough to have the support of some "leading economists." He figured (probably correctly) that reporters are not going to look to closely at the list.

I haven't yet seen any similar list from Obama or Clinton. Please e-mail me if you see such a list.

UPDATE: Galbraith writes in comments "Let me put it this way: if Manuel Castells had wanted to join your group, would you have turned him down?"

Good point. Still, I think this should have been "29 Economists and One of the Most Visionary Thinkers Alive Endorse Edwards."

Colin Danby in comments also leads me to this post, which explains that Galbraith put together the list in less than a week after reading an article that implied that Galbraith was the only high-profile economist to support Edwards.

The subtext to this is basically trade policy. The main reason his economist list is a bit thin is that he argues loudly that most leading economists are wrong on his key campaign issue.

It's worth noting, however, that in recent years views on trade have become nuanced among many "leading economists." Based on their recent work, Alan Blinder and Dani Rodrik, for example, are at least sympathetic to people concerned about the effects of trade on wages, even if they don't support Edwards.

David Leonhardt's Economic Scene column in the NY Times today contrasts Clinton's and Obama's approaches to thinking about economics and public policy. He writes the following:

The easiest way to describe Senator Clinton’s philosophy is to say that she believes in the promise of narrowly tailored government policies, like focused tax cuts. She has more faith that government can do what it sets out to do, which is a traditionally liberal view....

Senator Obama’s ideas, on the other hand, draw heavily on behavioral economics, a left-leaning academic movement that has challenged traditional neoclassical economics over the last few decades. Behavioral economists consider an abiding faith in rationality to be wishful thinking. To Mr. Obama, a simpler program — one less likely to confuse people — is often a smarter program.

It's hard to tell how much this represents a genuine difference in thinking between the candidates.

One example Leonhardt gives is their approaches to increasing retirement savings. There are basically two types of policies that have been advocated by progressive economists over the last few years. One is government matches to savings, either provided through a tax credit or through a government deposit in individual retirement savings accounts.

The other is automatic enrollment of employees in 401(k) and/or IRA savings programs. The motivation to make enrollment automatic is that many people don't sign up when it requires a positive action to do so. Research has shown that making enrollment automatic--with a voluntary option to opt out--would drastically increase enrollment and retirement savings.

These policies are complementary, and some version of each already exists. Specifically, since 2001 there have been limited government savings matches through the "Savers' Credit" for low-income workers. And in 2006, the Congress passed a law making it easy for employers to make enrollment in a 401(k) the default for its workers. Here is an issue brief which explains these issues in detail.

The main options for further progress are 1) expanding the savings match program to middle-class households, and 2) creating "automatic IRAs" to reach workers whose employers don't offer 401(k) programs. These are both good ideas. The automatic IRA is especially attractive because it would come at very little cost, while preserving individual freedom of choice (by allowing people to opt-out).

In Leonhardt's account, Clinton is advocating the first program, and Obama is proposing the second. In fact, however, both candidates are proposing similar versions of both policies.

Create Automatic Workplace Pensions: Obama's retirement security plan will automatically enroll workers in a workplace pension plan. Under his plan, employers who do not currently offer a retirement plan, will be required to enroll their employees in a direct-deposit IRA account that is compatible to existing direct-deposit payroll systems. Employees may opt-out if they choose. Experts estimate that this program will increase the savings participation rate for low and middle-income workers from its current 15 percent level to around 80 percent.

Expand Retirement Savings Incentives for Working Families: Obama will ensure savings incentives are fair to all workers by creating a generous savings match for low and middle-income Americans. His plan will match 50 percent of the first $1,000 of savings for families that earn less than $75,000. The savings match will be automatically deposited into designated personal accounts. Over 80 percent of these savings incentives will go to new savers.

Clinton has this page which describes her version of the matched savings program. She provides more detail, but the essence of the program is the same.

Although she gives it very little emphasis, Clinton is also proposing an automatic IRA scheme. Her page says that she will "encourage all employers to provide their employees with the option to directly deposit a portion of their salaries" into the new accounts and "automatically deposit savings unless their workers opt-out."

Is there any difference at all between the candidates on retirement security? Clinton does propose a higher income cutoff to the match ($100K per couple, rather than $75K). This would mean that more families would receive the match, but also that it would be substantially more expensive. Her website estimates that the cost would be $20-$25 billion per year.

Clinton is also proposing to "encourage" employers to make enrollment in the new IRAs automatic, while Obama explicitly says that he would require employers to do so. This is not the kind of thing that would win or lose an election, but requiring employers to participate is a better idea. Without a requirement, many employers would not bother to sign-up--due to the same behavioral inertia that causes many workers to not enroll in the first place.

Despite Leonhardt's attempts to draw distinctions between the two candidates in terms of economic policy philosophy, the differences between the two candidates on the issue he highlights--retirement security--are fairly small. This is not surprising, since no doubt both plans were written in close consulation with Mark Iwry and Bill Gale, the two main retirement security policy gurus. (Peter Orszag is in this group, too, but now that he's director of the Congressional Budget Office, I'm sure he's decided not to advise any political campaigns.) My guess is that this article is the product of efforts by Austan Goolsbee, Obama's economics advisor, to inflate the small differences between the two candidates.

One final note: the automatic IRA proposal, more loudly championed by Obama than Clinton, is a political no-brainer and is supported by both progressive economists and the right-wing Heritage Foundation. This is because it's smart, nearly cost-free policy. As such, it does fit better with Obama's "bring us together" rhetoric and gives lie to the claim that the only way forward on every issue is hard-core political warfare. Making IRAs "automatic," i.e. the default option, for workers without 401(k)s, would make millions of Americans better-prepared for retirement with a policy that Democrats and Republicans can readily agree.

I can't believe I missed until now this very good rebuttal to some of Krugman's criticisms of Obama, written by Jonathan Alter of Newsweek. Alter raises some points similar to those I mentioned in earlier posts and also draws on his deep knowledge of FDR to set the history straight:

The columnist and his candidate both believe that Franklin D. Roosevelt succeeded by being a polarizing figure. I studied FDR for four years while writing a book about him, and this is simply untrue. It's also untrue of other successful Democratic presidents and for a simple reason: "Bitter confrontation" simply doesn't work in policy-making.

Bear with me for a brief history lesson: The so-called "First New Deal" of 1933-34 came after Roosevelt won a landslide victory over Herbert Hoover in 1932 in a campaign devoid of any populist message despite an unemployment rate of at least 25 percent. First, FDR worked with Hoover treasury officials from the other party to rescue the banks under a conservative plan that included steep budget cuts. The rest of his famous "100 days" agenda-which included unprecedented jobs programs, agricultural reform, labor rights, and regulation of financial markets—was achieved with much more compromise than Krugman recognizes. Social Security came in 1935 after a big Democratic mandate in midterm elections and was enacted piecemeal and cooperatively (to the disappointment of many New Deal liberals) with everyone at the table.

During and after his 1936 reelection campaign, FDR—angry at the ingratitude of the rich Americans whose fortunes he had saved—adopted class-based politics. In 1937, with a big victory under his belt, he tried confrontation with his court-packing scheme. It failed badly. So did his effort to "purge" the opposition in 1938. The rest of his second-term was far less productive legislatively than his first. By the end of it, he turned to foreign policy. FDR's third-term success, dominated by World II, was dependent on his unifying the country.Similarly, Woodrow Wilson's big legislative triumphs over entrenched interests in 1913 (for example, an income tax), Lyndon Johnson's in 1965 (Medicare and the Voting Rights Act) and Bill Clinton's in 1993 (painful tax increases) were achieved with legislative skill, not brute force and a populist message.

Krugman is a populist. He writes that if nominated, Obama would win, "but not as big as a candidate who ran on a more populist platform." This is facile and ahistorical. How many 20th Century American presidents have been elected on a populist platform? That would be zero, Paul.